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. Last Updated: 07/27/2016

World Bank Loans Go Ahead

WASHINGTON -- The World Bank is pressing ahead with plans to lend Russia some $1 billion over the next couple of months, despite fresh signs that Moscow may be backtracking on some of its reform pledges. "We are going to go forward," World Bank President Lewis Preston said Monday. Preston, meeting briefly with reporters during the semi-annual meeting of the International Monetary Fund and the World Bank, said the loans would help strengthen Russia's banking system, oil industry and farming sector. The international lending organization reckons those investment loans have merits on their own, regardless of the overall state of Russia's economy. The outlook for Russia's reforms -- and thus its economy -- seemed to take a turn for the worse Monday, as the government was forced to add to its draft budget deficit under pressure from industrial lobbies for more spending. Economists, however, said that it was still too early to say how the budget would turn out. That budget is at the core of Russia's reforms and is a major reason why Moscow has won high praise from the IMF and wealthy industrialized nations for the progress it is making in stabilizing its shaky economy. A bigger deficit would tend to undercut those gains by putting upward pressure on inflation. "Our draft budget is now at the State Duma, and we don't want to change anything dramatically," Russian Finance Minister Sergei Dubinin told reporters in Washington. "But we have to have some compromise." Russian Central Bank head Viktor Gerashchenko said, however, that he thought measures could be taken later in the year to counteract the rise in the deficit. He added that he expects Russian inflation to remain relatively restrained, running at a monthly rate of 7 to 8 percent in April before jumping "a little bit" in May. The World Bank president said no one expected Russia's reform programs to go off without a hitch. "We all anticipated it would be stop-go," he said. "But what you've got now is a prime minister who's committed to reform and I think he has hopefully a better working relationship with the Duma than" his predecessor governments, Preston added.